If Two Countries Are Very Different in Relative Factor Abundance,then

question 25

Multiple Choice

If two countries are very different in relative factor abundance,then empirical support for which of the following would less likely?

• A) the Factor Price Equalization Theorem
• B) the Heckscher-Ohlin Theorem
• C) the Law of One Price
• D) the Law of Demand
• E) the Gravity Theorem

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Definitions:

Equilibrium Price

The cost at which the amount of a product or service that consumers want to buy matches the amount available, leading to equilibrium in the market.

Government Revenue

The income received by the government from taxes and non-tax sources like charges for services and customs duties.

Price Ceiling

A government-imposed limit on how high a price of a good or service can be charged in the market.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.